The par value of the common stock represents the
A)amount entered into the corporation's Common Stock account when a share is issued.
B)liquidation value of the stock.
C)market value of a share of stock.
D)amount the corporation received when the stock was issued.

Question

Quizplus · Accepted Answer

The par value of the common stock represents the amount that is entered into the corporation's Common Stock account when a share is issued. It is essentially an arbitrary value assigned to the stock by the company and represents the minimum amount that must be paid for the stock. The actual market value of the stock may be higher or lower than the par value. The par value is also used to calculate legal capital requirements for the company.

The Par Value of the Common Stock Represents the